Danone To Invest HKD4.389 Billion In Yashili

Chinese dairy company Mengniu has signed a three-party acquisition agreement with Yashili and Danone.

According to the agreement, Danone will invest about HKD4.389 billion to purchase Yashili's newly issued shares. On the completion of the deal, Danone will gain a 25% stake in the Chinese infant formula firm, making Danone the second largest shareholder of the company.

Yashili will issue 1.186 billion new shares to Danone at the price of HKD3.7 per share, totaling HKD4.389 billion. After the completion of the transaction, the shareholding of Mengniu, Yashili's largest shareholder, will decrease from 68% to 51%, still being the controlling shareholder.

Yashili said that they will use the new funds to expand and enhance their infant formula business, including strategic investments, so as to improve their technical level and production capacity.

Emmanuel Faber, chief executive officer of Danone, said that by acquiring an equity stake in Yashili, they are strengthening the winning team formed by Danone and Mengniu. The two parties will combine Mengniu's wide-reaching network in China and Danone's international expertise in infant milk products.